Labels

Monday, June 08, 2009

We don’t know whether the title (SVP, Industrial Development and Innovation) is Orwellian buracrospeak or in fact quite precise, but we were rather taken by the press release out of Sanofi Aventis today noting that its top international development man – Jean-Philippe Santoni – would now be boss of life-cycle management.

Were this the industry of even two years ago, the new job would have been quite a come-down for Santoni, a railroad siding far from the main train track to new drugs. But this is an industry which is recognizing it’s got far more in common with Coke, P&G, and McDonalds than with Big-Bet Big Pharma 1980 – 2007. That is to say: managers these days are learning to leverage only very modest top-line growth into faster bottom-line growth through cost-savings, bolt-on acquisitions, and rapid introductions of incrementally-improved new products. The traditional, high-risk, high-growth R&D-based model is gone, in case you hadn't noticed.

So.....companies need to squeeze a lot more Euros out of each asset. That means selling branded versions of off-patent drugs in emerging markets or, like GlaxoSmithKline with Ventolin, working with Wal-Mart to make it a store-brand generic. It also means revitalizing what has traditionally been an industry backwater: drug delivery and reformulation. Plenty of companies have life-cycle-managed plenty of drugs but it has never before now been the face of R&D, which has been all about the discovery of new compounds. (Nor has it before now been called 'innovation' as far as we're aware.)

By taking a guy like Santoni and giving him a job most self-respecting development execs would once have turned down before the offer left the boss’s lips, Sanofi is saying that it is in fact an industrial company powered by industrial innovations, which are by economic necessity different than scientific ones (like the scientific success/industrial failure rimonabant).

Should the trend catch on, we might even see drug companies split R&D in two: Novel Products R&D (largely outsourced, we’d imagine, to optionalize the spending) and Innovative Industrial R&D (think combination products, drug delivery, and single-isomer formulations). The goal of the latter: say a 50% rate of Phase II products making it through approval, up from what Booz & Co. and Credit Suisse say is 10% today.

Incidentally, the Sanofi announcement is very good news for drug-delivery companies, which have been flailing about, largely unsuccessfully, for the past 15 years or so (see, for example, this analysis). Their clients haven’t been particularly interested in their wares, at least at prices exciting to drug delivery’s investors. Now with a new economics in place at Pharma, all those arguments for reformulation and delivery will begin to sound just a trifle more interesting.

Image courtesy of Flickr user Omar Eduardo and used under a Creative Commons license.

About This Blog

Welcome to The IN VIVO Blog, home of daily commentary on recent developments in biopharmaceutical business development, R&D, financing, marketing, and policy. Join us for discussion in the comments, or contact us via email.